OR Manager - February 2019 - 10

OR business
Supply chain
Continued from page 1
Navigant report estimated that hospitals
may be spending $25.4 billion
more than necessary on supply chain
(up by 10.2% from 2017).
Amazon offers a wide array of healthcare
products, including IV fluids and
administration kits, dressings, ostomy
supplies, pulse oximeter monitors, and
durable medical equipment. Many basic
surgical instruments such as forceps,
hemostats, needle holders, retractors,
and scissors can be purchased online
as well, along with suture, suction catheters
and canisters, urinary catheters,
and other medical items seen in the
OR.
Summit orders mostly nonsurgical
items from Amazon, although it purchases
some surgical instruments,
which are sterilized by the hospital before
use.
" This [ordering through Amazon]
is
a no-brainer for smaller hospitals and
systems with fewer than 10 procurement
people, " says Palcich, manager
of business analytics and logistics for
a four-person supply chain department
at Summit. " It allows people to focus
more on patient care. " Summit is a
critical-access hospital with three rural
healthcare clinics and an urgent care
clinic.
Amazon isn't limiting itself to smaller
hospitals, however. The company is
also partnering with a hospital in the
Midwest, which it declined to name,
although market penetration isn't widespread.
(Amazon did not respond to
a request for the number of hospitals
using the service.)
" We need disruptors [like Amazon]
in every type of business to keep us
sharp and to provide us with ideas that
we never thought of and we didn't think
were practical, " says Jamie Kowalski,
MBA, FACHE, founder of Jamie C. Kowalski
Consulting, LLC, a healthcare
www.ormanager.com
Jamie
Kowalski,
MBA, FACHE
supply chain management company in
Whitefish Bay, Wisconsin. " Sometimes
we get stuck in what's comfortable. "
Will Amazon produce exciting
new processes, or
will its fate be like the
UPS plan to revolutionize
the healthcare supply
chain, which hasn't
taken off as quickly as
expected? What do OR,
supply chain, and business
leaders need to
consider before ordering through Amazon?
What other supply chain disruptions
are occurring?
To answer those questions, OR Manager
spoke with experts in a variety of
settings. In Part 1, we'll share what we
learned about Amazon's current and
possible future role in the surgical supply
chain. Part 2 will examine technology-related
innovations and how they
can improve the supply chain.
Ease of ordering
Amazon's advantages can be illustrated
by the Summit experience. Although
Summit doesn't have ORs, the hospital
and clinics need some of the same
supplies required in the OR, such as
gloves, forceps, and biomedical filters.
Summit only orders supplies that will
not be used on or in a patient, unless
they can prepare it properly. For
instance, surgical scissors and other
basic surgical instruments can be purchased
and then sterilized before use,
but dressings cannot, so dressings are
not ordered through Amazon.
Examples of products Summit orders
include office supplies, safety glasses,
televisions for patient care areas, service
carts, lab coats, computer equipment,
pulse oximeters, and medicine
cups.
Palcich was inspired to give Amazon
Business a try based on his personal
experience with using Amazon and the
desire to reduce time spent on procurement.
" Users were spending too much
time searching for what they wanted in
a ticket system, " he says.
Now clinical staff compare prices
and place an order online by selecting
a button next to the photo of what they
want. The order is routed to the department
manager for approval and then
goes to supply chain staff for final approval,
procurement, and creation of a
purchase order. Dollar limits are set for
request approvals.
Each employee has a secure login
to promote cybersecurity. Once a facility
has placed an order, the address
and payment information are retained
in the system for future purchases, and
delivery can be tracked. When the package
arrives, staff check the label to see
where it needs to be delivered and use
an app called Package Zen loaded onto
an iPod touch to record the signature
and tracking information.
Amazon Dash buttons make reordering
more efficient. When a supply
chain staff member sees that inventory
is running low in a product bin,
he or she pushes the Dash button in
the bin, which triggers an email to the
purchasing department. The email includes
the item, where it needs to be
delivered, and the quantity. The order
is also sent to the appropriate manager
for approval. Once approved, the order
is placed.
Palcich finds the detailed reports
from Amazon, which show him analytics
such as who ordered, what was ordered,
supplier name, and cost, to be
helpful. " You can really drill down, see
what you are buying, and see if you
should go to contract on a product, "
Palcich says.
He cites the example of paper: " We
can say how many we want to buy, vendors
then bid on the landed cost of a
pallet of paper, and we can select the
lowest bid, or not. " He notes that the
process is used primarily for larger purchases
when speed doesn't matter.
Continued on page 10
OR Manager | February 2019
9
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OR Manager - February 2019

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